News | Banking

RBI Cancels Licence of Deccan Urban Co-operative Bank

MAS Team 19 August 2022
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The Reserve Bank of India (RBI) on Thursday said the licence of Deccan Urban Cooperative Bank, Karnataka, has been cancelled as the lender does not have adequate capital and earning prospects. As per the data submitted by the bank, more than 99% of the depositors are entitled to receive the full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the banking regulator said in a release. The cooperative bank ceases to carry on banking business, with effect from the close of business on Thursday 18th August. "The bank does not have adequate capital and earning prospects," the RBI said while announcing the cancellation of the licence.
 
It also said the Vijayapur-based bank with its present financial position would be unable to pay its present depositors in full. The RBI has requested the Commissioner for Cooperation and Registrar of Cooperative Societies, Karnataka, to issue an order for winding up the bank and appoint a liquidator for the bank. On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to Rs5 lakh DICGC. As of 6 August 2022, DICGC has already paid Rs13.07 crore of the total insured deposits. In another release, the RBI said it has imposed a penalty of Rs5,93,000 on Obopay Mobile Technology India Private Limited for non-compliance with certain provisions of norms on Prepaid Payment Instruments (PPIs) and Know Your Customer (KYC)
 
The central bank, however, said that the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers.
 
It may be recalled that in May 2022, the RBI had extended the directions on the bank for a further period of three month s for a further period of three months from 20 May 2022, to 19 August 2022, subject to review.” The bank was first placed under restriction on 18 February 2021, the validity of which was last extended up to 19 May 2022.
 

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25th Sept 2020
 
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